Rosenberg On Recession Chances: History On Our Side

Mish

Economist David Rosenberg assesses the odds of a recession are over 80%.

“History is on our side. There have been 13 Fed tightening cycles since 1950. Ten of these landed the economy in recession, and neither the consensus nor the Fed staff saw them coming when they actually started. So before knowing anything else, the fact that we have been in the midst of a Fed tightening phase sends recession odds north of 80%.”

A friend sent that quote and it rings true in this corner as noted in Powell Promises Patience: So What? It Doesn't Matter

Mike "Mish" Shedlock

Comments (17)
No. 1-9
2banana
2banana

Fed tightening? Hardly. It is barely a blip. In fact, 10 years rates have barely budged over the last three years

The great QE unwind is what is driving this.

We have never distorted the economic system of America with the massive amounts of trillions of dollars of QE, bailout after bailout, destruction of 100 of years of contract law, too big to fail and too big to prosecute.

The massive corruption of the obama administration will take a generation to sort out.

lol
lol

Hardly matters,Powell has signaled he's a playa,which means rate cuts and the mother of all QE programs code named operation QEpocalypse,massive coordinated around the clock central (overt) money printing.By 2nd Qtr your looking at 2 rate cutes and between wait for it....1 to 2 TRILLION a MONTH in fresh money printing,your welcome.

RonJ
RonJ

JP Morgan sees a 60% chance. Considering not every rate hike cycle has resulted in a recession, what percentage prediction of recession has been the tipping point of a sure thing recession? 80% sounds like a sure thing.

shamrock
shamrock

There have been 6 new decades since 1950, 5 of them landed in recession within a year. All but 2010. It's a correlation you see, not a cause. There's a difference.

themonosynaptic
themonosynaptic

I'd estimate that the chances of another recession are close to 100% - but the real question is when. I'm assuming, even though it isn't stated, that this is a prediction for 2019.

The chances of a recession are increased by the clown show in the White House. Even with the trade war, White House stupidity and general incompetence will make a regular recession will bite a bit harder than it should. Add to that the fact that the loudmouth can't keep quiet about Fed policy, and risks interfering with the Fed's ability to react without being seen as taking orders from (of all people) the current idiot-in-chief.

However if there is a genuine financial crisis and we need real leadership, then we are hosed. Mnuchin is a complete lightweight. Powell isn't going to be able to do this by himself, and it is likely that we'll have a lot of "helpful" morons like Navarro interfering as well.

themonosynaptic
themonosynaptic

It is always valuable to check out the predictions of these "wizards" from a couple of years ago. For example, if you followed Rosenberg's advice in December 2016, you'd have loaded up on cash just as 2017 was poised to return over 20% (S&P500).

The best prediction expert I know, and I always follow his advice, is Barry Ritholtz, who predicts that most experts can't predict very well.

RB2
RB2

okay okay, if recession then when did the expansion begin because without an effective date then the talk of recession is bogus. From expansion we can all count off towards the date of real recession.

Realist
Realist

Predictions are difficult, especially about the future. A recession is possible in 2019 if Trump escalates his trade war, or some black swan event occurs. But I’m not expecting one. I predict that Rosenberg will continue to be wrong with about 80% of his predictions (he is just awful).

ML1
ML1

Krugman wants 80% tax rates for the rich:

With 80% tax rates a recession and depression would be 100% sure.

Even France realized that 75% tax rates are preposterous and scrapped their 75% tax rate plans but in Krugman's bubble 80% tax rates would be just fine.


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